UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
February 11, 2016
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||||
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Date of Report (Date of earliest event reported)
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||||
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NU SKIN ENTERPRISES, INC.
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(Exact name of registrant as specified in its charter)
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Delaware
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001-12421
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87-0565309
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(State or other jurisdiction of incorporation)
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(Commission File Number)
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(IRS Employer Identification Number)
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75 West Center Street
Provo, Utah 84601
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(Address of principal executive offices and zip code)
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(801) 345-1000
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(Registrant's telephone number, including area code)
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N/A
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(Former name or former address, if changed since last report)
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
□ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
□ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
| □ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| □ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4 (c)) |
Item 2.02 Results of Operations and Financial Condition.
On February 11, 2016, Nu Skin Enterprises, Inc. (the "Company") issued a press release announcing its financial results for the fourth quarter and year ended December 31, 2015, and certain other information. A copy of the Company's press release is attached as Exhibit 99.1 to this report and incorporated by reference.
The information furnished pursuant to this Item 2.02 and the exhibit hereto shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and shall not be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act except as shall be expressly set forth by specific reference in such filing.
The press release furnished herewith in Exhibit 99.1 may contain non-GAAP financial measures. Management believes non-GAAP financial measures assist management and investors in evaluating and comparing period-to-period results and projections in a more meaningful and consistent manner.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibit.
| 99.1 | Nu Skin Enterprises' press release dated February 11, 2016, regarding financial results for the fourth quarter and year ended December 31, 2015. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
NU SKIN ENTERPRISES, INC.
(Registrant)
(Registrant)
/s/ Ritch Wood
Ritch Wood
Chief Financial Officer
Chief Financial Officer
Date: February 11, 2016
EXHIBIT INDEX
Exhibit No. Exhibit Description
| 99.1 | Nu Skin Enterprises' press release dated February 11, 2016, regarding financial results for the fourth quarter and year ended December 31, 2015. |
FOR IMMEDIATE RELEASE
CONTACTS:
Investors — Scott Pond (801) 345-2657, spond@nuskin.com
Media — Kara Schneck (801) 345-2116, kschneck@nuskin.com
Media — Kara Schneck (801) 345-2116, kschneck@nuskin.com
NU SKIN ENTERPRISES REPORTS FOURTH-QUARTER AND 2015 RESULTS
PROVO, Utah — Feb. 11, 2016 — Nu Skin Enterprises, Inc. (NYSE: NUS) today announced fourth-quarter results, with revenue of $572.2 million, compared to $609.6 million in the prior-year period. Revenue grew on a constant-currency basis, but was negatively impacted 7 percent, or approximately $42 million, by foreign currency fluctuations. Earnings per share for the quarter were $0.62, compared to $0.77 in the prior-year period.
The company also reported full-year 2015 revenue of $2.25 billion, compared to $2.57 billion in 2014. Annual revenue was negatively impacted 8 percent by a strengthened U.S. dollar. Earnings per share for 2015 were $2.25, compared to $3.11 in 2014.
"We generated sequential business improvement in the fourth quarter as we continued introducing our newest ageLOC products," said Truman Hunt, president and chief executive officer. "We began initial sales of our ageLOC Youth nutritional supplement in the Americas region in the fourth quarter, generating a 16 percent year-over-year revenue improvement. This builds on the successful third-quarter introduction of ageLOC Youth in the South Asia/Pacific region.
"The December introduction of our ageLOC Me customized skin care system was well received in Japan where we offered the product only through qualified sales leaders. We were encouraged by product sales, as well as sales leader growth. In South Korea, the introductory offer bundled the ageLOC Me device with a 12-month product subscription commitment. While we believe this approach muted initial sales, we are seeing a high level of follow-on purchases in the first quarter, and we have gained valuable insights from these initial launches that we believe will help us maximize the impact of this innovative product going forward.
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Nu Skin Enterprises, Inc.
Feb. 11, 2016
Page 2
"Looking at sales force trends, we see encouraging signs in several markets, which posted sales leader improvements in the quarter," continued Hunt. "As we introduce our new products throughout the year, the key to our success will be our ability to generate growth in sales leaders and a corresponding increase in actives."
Regional Results
The company's regional revenue results for the three-month periods ended December 31 are presented in the following table.
|
2015
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2014
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%
Change
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Constant Currency
% Change
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|||||||||||||
|
Greater China
|
$
|
195,495
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$
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212,981
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(8%)
|
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(5%)
|
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||||||||
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North Asia
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173,798
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186,041
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(7%)
|
|
---*
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||||||||||
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Americas
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95,553
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82,470
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16%
|
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26%
|
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||||||||||
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South Asia/Pacific
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74,274
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86,626
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(14%)
|
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(2%)
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||||||||||
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EMEA
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33,078
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41,489
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(20%)
|
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(8%)
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||||||||||
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Total
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$
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572,198
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$
|
609,607
|
(6%)
|
|
---*
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||||||||
*Less than a 1% change.
The Company's regional revenue results for the years ended December 31 are presented in the following table.
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2015
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2014
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%
Change
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Constant Currency
% Change
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|||||||||||||
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Greater China
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$
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771,667
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$
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948,523
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(19%)
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(17%)
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||||||||
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North Asia
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686,555
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782,985
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(12%)
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(4%)
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||||||||||
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Americas
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329,668
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329,027
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---*
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13%
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||||||||||
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South Asia/Pacific
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321,971
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328,388
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(2%)
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10%
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||||||||||
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EMEA
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137,186
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180,572
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(24%)
|
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(8%)
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||||||||||
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Total
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$
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2,247,047
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$
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2,569,495
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(13%)
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(5%)
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*Less than a 1% change.
-more-
Nu Skin Enterprises, Inc.
Feb. 11, 2016
Page 3
The company's regional actives and sales leaders statistics are presented in the following table.
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2015
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2014
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% Increase (Decrease)
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||||||||||||||||||||||
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Actives
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Sales Leaders
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Actives
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Sales Leaders
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Actives
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Sales Leaders
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|||||||||||||||||||
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Greater China
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223,000
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27,064
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393,000
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24,537
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(43.3%)
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10.3%
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North Asia
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366,000
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17,415
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391,000
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17,478
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(6.4%)
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(0.4%)
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Americas
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176,000
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8,708
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186,000
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7,471
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(5.4%)
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16.6%
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||||||||||||||||
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South Asia/Pacific
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119,000
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10,476
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124,000
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8,458
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(4.0%)
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23.9%
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||||||||||||||||
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EMEA
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110,000
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3,912
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114,000
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4,065
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(3.5%)
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(3.8%)
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Total
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994,000
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67,575
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1,208,000
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62,009
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(17.7%)
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9.0%
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"Actives" are persons who purchased products directly from the company during the previous three months.
"Sales Leaders" are independent distributors, and sales employees and independent marketers in China, who achieve certain qualification requirements.
Operational Performance
The company's operating margin for the quarter was 10.8 percent, compared to 15.0 percent in the fourth quarter of 2014. Gross margin during the quarter was 78.8 percent, versus 82.5 percent in the prior-year period. Gross margin was negatively impacted by a reclassification of certain inventory-related expenses from general and administrative expenses to cost of goods sold beginning in the first quarter of 2015. Both gross and operating margins were also negatively impacted by significant strengthening of the U.S. dollar. Selling expenses were 41.5 percent of sales in the fourth quarter, compared to 42.1 percent in the prior-year period. General and administrative expenses were 26.5 percent of sales, which included costs associated with our 2015 global convention, compared to 25.4 percent in the prior-year period. The company's effective income tax rate for the quarter was 38.7 percent, compared to 38.1 percent in the prior-year period. Cash and current investments at the end of the quarter were $303.7 million, and debt was $249.6 million. Dividend payments during the quarter were $19.8 million. Cash flow from operations for the quarter was $80.1 million, and the company repurchased $60.0 million of its outstanding shares.
Outlook
"We enter 2016 with a calendar filled with significant product launches," said Hunt. "In the Americas, Japan and South Asia, where we have executed well, these product launches have generated positive results. In South Korea and China, we are moderating our expectations based on the December launch of ageLOC Me in South Korea and economic uncertainty in China.
-more-
Nu Skin Enterprises, Inc.
Feb. 11, 2016
Page 4
"Our balance sheet also remains strong as we continue to generate healthy cash flow. We repurchased $60 million of our outstanding shares in the fourth quarter. For the year, we repurchased more than 5 percent of our outstanding shares. We also announced today an increased dividend for the 15th consecutive year, demonstrating our continuing commitment to return value to shareholders," concluded Hunt.
"As we update our outlook for 2016, we forecast even local-currency revenue in North Asia and EMEA versus 2015, with mid-single-digit growth in each of our other regions," said Ritch Wood, chief financial officer. "This forecast reflects local-currency growth in the 2 percent range for the year. We now forecast the strengthening dollar to negatively impact revenue by approximately 7 percent versus our prior forecast of 4 percent, resulting in revenue of $2.10 billion to $2.15 billion for 2016. At this revenue level, we forecast an operating margin of 10.5 percent to 11.0 percent for the year, with earnings per share of $2.40 to $2.60. Our most significant product launch events are scheduled in the second and fourth quarters of this year, which we believe will drive stronger results in those quarters. For the first quarter, assuming a negative currency impact of 6 to 7 percent, we estimate revenue of $450 million to $470 million, with earnings per share of $0.35 to $0.38," concluded Wood.
The Nu Skin management team will host a conference call with the investment community on Feb. 11, at 5 p.m. (ET). Those wishing to access the webcast, as well as the financial information presented during the call, can visit the Investor Relations page on the company's website at ir.nuskin.com. A replay of the webcast will be available at the same URL through Feb. 26, 2016.
About Nu Skin Enterprises, Inc.
Founded more than 30 years ago, Nu Skin Enterprises, Inc. develops and distributes innovative consumer products, offering a comprehensive line of premium-quality beauty and wellness solutions in 54 markets worldwide. The company builds upon its scientific expertise in both skin care and nutrition to continually develop innovative product brands that include the Nu Skin® personal care brand, the Pharmanex® nutrition brand, and most recently, the ageLOC® anti-aging brand. Since its introduction in 2008, the ageLOC brand has generated more than $5 billion in sales, and built a loyal following for such products as the ageLOC® Youth nutritional supplement, the ageLOC® Me customized skin care system, and the ageLOC® TR90® weight management and body shaping system. Nu Skin sells its products through a global network of sales leaders. As a long-standing member of direct selling associations globally, Nu Skin is committed to the industry's consumer protective guidelines that support and protect those who sell and purchase its products through the direct selling channel. Nu Skin is also traded on the New York Stock Exchange under the symbol "NUS." More information is available at http://www.nuskin.com.
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Nu Skin Enterprises, Inc.
Feb. 11, 2016
Page 5
Please Note: This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that represent the company's current expectations and beliefs. All statements other than statements of historical fact are "forward-looking statements" for purposes of federal and state securities laws and include, but are not limited to, statements of management's expectations regarding the company's performance, growth, initiatives, new product introductions, sales force and consumers; projections regarding revenue, operating margin, earnings per share, foreign currency fluctuations, uses of cash and other financial items; statements of belief; and statements of assumptions underlying any of the foregoing. In some cases, you can identify these statements by forward-looking words such as "believe," "expect," "project," "anticipate," "estimate," "intend," "plan," "targets," "likely," "will," "would," "could," "may," "might," the negative of these words and other similar words.
The forward-looking statements and related assumptions involve risks and uncertainties that could cause actual results and outcomes to differ materially from any forward-looking statements or views expressed herein. These risks and uncertainties include, but are not limited to, the following:
|
·
|
any failure of current or planned initiatives or products to generate interest among our sales force and customers and generate sponsoring and selling activities on a sustained basis;
|
|
·
|
risk of foreign currency fluctuations and the currency translation impact on the company's business associated with these fluctuations;
|
|
·
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risk that direct selling laws and regulations in any of our markets, including the United States and China, may be modified, interpreted or enforced in a manner that results in negative changes to our business model or negatively impacts our revenue, sales force or business, including through the interruption of sales activities, loss of licenses, imposition of fines, or any other adverse actions or events;
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|
·
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risks related to accurately predicting, delivering or maintaining sufficient quantities of products to support our planned initiatives or launch strategies, and increased risk of inventory write-offs if we over-forecast demand for a product or change our planned initiatives or launch strategies;
|
|
·
|
regulatory risks associated with the company's products, which could require the company to modify its claims or inhibit the company's ability to import or continue selling a product in a market if it is determined to be a medical device or if it is unable to register the product in a timely manner under applicable regulatory requirements;
|
|
·
|
adverse publicity related to the company's business, products, industry or any legal actions or complaints by the company's sales force or others;
|
|
·
|
risk that litigation, investigations or other legal matters could result in settlements, assessments or damages that significantly affect financial results;
|
|
·
|
unpredictable economic conditions and events globally;
|
|
·
|
any prospective or retrospective increases in duties on the company's products imported into the company's markets outside of the United States and any adverse results of tax audits or unfavorable changes to tax laws in the company's various markets; and
|
|
·
|
continued competitive pressures in the company's markets.
|
-more-
Nu Skin Enterprises, Inc.
Feb. 11, 2016
Page 6
The company's financial performance and the forward-looking statements contained herein are further qualified by a detailed discussion of associated risks set forth in the documents filed by the company with the Securities and Exchange Commission. The forward-looking statements set forth the company's beliefs as of the date that such information was first provided and the company assumes no duty to update the forward-looking statements contained in this release to reflect any change except as required by law.
-more-
Nu Skin Enterprises, Inc.
Feb. 11, 2016
Page 7
|
NU SKIN ENTERPRISES, INC.
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Consolidated Statements of Income (Unaudited)
|
||||||||
|
For the Fourth Quarters Ended December 31, 2015 and 2014
|
||||||||
|
(in thousands, except per share amounts)
|
||||||||
|
2015
|
2014
|
|||||||
|
Revenue
|
$
|
572,198
|
$
|
609,607
|
||||
|
Cost of sales
|
121,437
|
106,505
|
||||||
|
Gross profit
|
450,761
|
503,102
|
||||||
|
Operating expenses:
|
||||||||
|
Selling expenses
|
237,658
|
256,693
|
||||||
|
General and administrative expenses
|
151,389
|
155,111
|
||||||
|
Total operating expenses
|
389,047
|
411,804
|
||||||
|
Operating income
|
61,714
|
91,298
|
||||||
|
Other (expense)/income, net
|
(3,289
|
)
|
(16,127
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)
|
||||
|
Income before provision for income taxes
|
58,425
|
75,171
|
||||||
|
Provision for income taxes
|
22,585
|
28,664
|
||||||
|
Net income
|
$
|
35,840
|
$
|
46,507
|
||||
|
Net income per share:
|
||||||||
|
Basic
|
$
|
0.63
|
$
|
0.79
|
||||
|
Diluted
|
$
|
0.62
|
$
|
0.77
|
||||
|
Weighted average common shares outstanding:
|
||||||||
|
Basic
|
56,792
|
59,117
|
||||||
|
Diluted
|
57,524
|
60,442
|
||||||
-more-
Nu Skin Enterprises, Inc.
Feb. 11, 2016
Page 8
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NU SKIN ENTERPRISES, INC.
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|
Consolidated Statements of Income (Unaudited)
|
||||||||
|
For the Years Ended December 31, 2015 and 2014
|
||||||||
|
(in thousands, except per share amounts)
|
||||||||
|
2015
|
2014
|
|||||||
|
Revenue
|
$
|
2,247,047
|
$
|
2,569,495
|
||||
|
Cost of sales
|
489,510
|
478,434
|
||||||
|
Gross profit
|
1,757,537
|
2,091,061
|
||||||
|
Operating expenses:
|
||||||||
|
Selling expenses
|
951,372
|
1,116,572
|
||||||
|
General and administrative expenses
|
561,463
|
622,301
|
||||||
|
Total operating expenses
|
1,512,835
|
1,738,873
|
||||||
|
Operating income
|
244,702
|
352,188
|
||||||
|
Other (expense)/income, net
|
(32,743
|
)
|
(53,681
|
)
|
||||
|
Income before provision for income taxes
|
211,959
|
298,507
|
||||||
|
Provision for income taxes
|
78,913
|
109,331
|
||||||
|
Net income
|
$
|
133,046
|
$
|
189,176
|
||||
|
Net income per share:
|
||||||||
|
Basic
|
$
|
2.29
|
$
|
3.20
|
||||
|
Diluted
|
$
|
2.25
|
$
|
3.11
|
||||
|
Weighted average common shares outstanding:
|
||||||||
|
Basic
|
57,997
|
59,073
|
||||||
|
Diluted
|
59,057
|
60,887
|
||||||
-more-
Nu Skin Enterprises, Inc.
Feb. 11, 2016
Page 9
|
NU SKIN ENTERPRISES, INC.
|
||||||||
|
Consolidated Balance Sheets (Unaudited)
|
||||||||
|
As of December 31, 2015 and 2014
|
||||||||
|
(in thousands)
|
||||||||
|
2015
|
2014
|
|||||||
|
ASSETS
|
||||||||
|
Current assets:
|
||||||||
|
Cash and cash equivalents
|
$
|
289,354
|
$
|
288,415
|
||||
|
Current investments
|
14,371
|
11,793
|
||||||
|
Accounts receivable
|
35,464
|
35,834
|
||||||
|
Inventories, net
|
265,256
|
338,491
|
||||||
|
Prepaid expenses and other
|
101,947
|
160,134
|
||||||
|
706,392
|
834,667
|
|||||||
|
Property and equipment, net
|
454,537
|
464,783
|
||||||
|
Goodwill
|
112,446
|
112,446
|
||||||
|
Other intangible assets, net
|
67,009
|
75,062
|
||||||
|
Other assets
|
165,459
|
127,476
|
||||||
|
Total assets
|
$
|
1,505,843
|
$
|
1,614,434
|
||||
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
|
Current liabilities:
|
||||||||
|
Accounts payable
|
$
|
28,832
|
$
|
34,712
|
||||
|
Accrued expenses
|
310,916
|
300,847
|
||||||
|
Current portion of long-term debt
|
67,849
|
82,770
|
||||||
|
407,597
|
418,329
|
|||||||
|
Long-term debt
|
181,745
|
164,567
|
||||||
|
Other liabilities
|
90,880
|
89,100
|
||||||
|
Total liabilities
|
680,222
|
671,996
|
||||||
|
Stockholders' equity:
|
||||||||
|
Class A common stock
|
91
|
91
|
||||||
|
Additional paid-in capital
|
419,921
|
414,394
|
||||||
|
Treasury stock, at cost
|
(1,017,063
|
)
|
(862,608
|
)
|
||||
|
Accumulated other comprehensive loss
|
(71,269
|
)
|
(51,521
|
)
|
||||
|
Retained earnings
|
1,493,941
|
1,442,082
|
||||||
|
825,621
|
942,438
|
|||||||
|
Total liabilities and stockholders' equity
|
$
|
1,505,843
|
$
|
1,614,434
|
||||
###